What Happens When The Beneficiary Dies?

When the Beneficiary dies, the holdback amount (any Grant or Bond received within the previous ten years) must be repaid to the federal government.  Whatever remains in a RDSP will become part of the Beneficiary’s estate and will be distributed according to his/her will. Personal contributions are not refundable to the original contributors. Unlike trusts, contributors cannot determine who gets the assets if the Beneficiary passes away.

RDSP’s are also different from RESPs.  With RESPs, the plan is actually an asset of the contributor and when the Beneficiary passes away, the asset becomes part of the estate of the contributor.  The RDSP, however, is owned by the Beneficiary and any funds contributed into the plan become part of the estate when the Beneficiary dies.

This means that people need to have wills.  If they don’t set up a will, then they will die intestate and their assets will be distributed as per a provincial law that dictates what happens to a person’s estate if he/she dies without a will.


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